ISLAMIC ECONOMIC SYSTEM
Definition of Economics
A. Ibnu Khaldun’s Definition
Economics is the study of humankind’s civilization and human association. It also refers to activity related to humankind’s livehood, its development, progress and prosperity. The economic problem resides in efforts spent by people to obtain earnings that they used to satisfy their needs and necessities, for refinements and luxuries, and for acquisition and possession. Hence we can conclude that Economics is the study of human efforts in obtaining resources and using them, through exchange, for the fulfillment of necessities, needs and refinements as well as for the purpose of acquisition. What is Islamic Economic System?
Several definitions of Islamic economics are ventured by Muslim Economist : A. Hasanuz Zaman
Islamic economic system is the knowledge and application of injuction and rules of the Shari’ah that prevent injustice in the acquisition and disposal of material resources in order to provide satisfaction to human beings and enable them to perform their obligations to Allah and the societies. B. Zaidan Abu al Makarim
Islamic economic system is the sciences that deal with wealth and its relation to man from the point of view of the realization of justice in all forms of economic activities. C. M. Akram Khan
Islamic economic system is the study of human falah achieved by organizing the resources of earth on the basis of cooperation and participation. In conclusion, Islamic economic system identifies a study of human behavior with regard to acquiring and using resources for the satisfaction of necessities, needs and other desires. This study is based on the assumptions of the Islamic paradigm. Methodology of Elaborating Islamic Economic System
The Islamic economic system is derived from the Qur’an and Sunnah .The Qur’an, as it is well known, does not devote special sections or chapters to any single issues or aspect of life. As for the Sunnah, the sayings and the actions of the Prophet are sorted, in the books of collections. The job of Muslim economist who attempt to discover the Islamic economic system and puts it pieces together is to through the Qur’an and Sunnah, determine those texts that are relevant to the subject and make a coherent composite out of them. Discovering the Islamic Economic System
Traditional Islamic concepts having to do with economics included: Zakat- The "taxing of certain goods, such as harvest, with an eye to allocating these taxes to expenditures that are also explicitly defined, such as aid to the needy." Gharar- "The interdiction of chance, that is, of the presence of any element of uncertainty, in a contract (which excludes not only insurance but also the lending of money without participation in the risks)." Riba- "Referred to as usury (modern Islamic economists reached consensus that Riba is any kind of interest, rather than usury. Characteristic of Islamic Economic System
I. Alliance with shariaah.
II. Lies on the rule specified by the shariaah namely of the codification of injuction given by the Holy Quran and traditions of Prophet Muhammad. III. Based on equality.
IV. Ensure every individual has equal access to natural resources and means of livehood. Second, everyone has equal opportunity to use the resources included education, skills and technology. Third, the market is based on the rule of justices that is authority ensures equal proportion in exchange V. Property rights.
VI. Allah is the owner of the whole land individual has been given the rights of the possession as a trust. VII. System of Zakat.
VIII. The poor and needy have a claim to be sustained by the society. IX. Interest free economy.
X. The Quran prohibits strongly the payment and receipt of interest (riba). XI. Taxation system (Jizyah1, Ushr2, Kharaj3).
XIII. Currency in the pure Islamic state can only be based on gold and silver. Thus, it will be of real value itself, providing stability in the...
...The Nature of Economics
the economic problem- wants, resources, scarcity
* Needs are goods and services essential for survival.
* Wants are goods and services that aren’t essential for survival but make our lives easier.
* Individual ants are desires of each individual person and depend on preference.
* Collective wants are reflected on choices of the community.
* Concurrent are wants that are satisfied over and over again.
* Complementary are wants that naturally follow the initial satisfaction of another want.
* Factors that effects wants changing overtime include age, income, technology and fashion.
* Resources are used in the production process to produce goods and services.
* The four factors of production are:
* Land: natural resources create rent.
* Labour: human effort in production and creates wages.
* Capital: refers to goods that are used to produce more goods and services in the future and creates interest.
* Enterprise: ability of entrepreneurs to take risks in organising other factors of production and creates profits.
* Scarcity of resources is an economic problem.
* Choices need to be made on how resources will be used n production.
* What to produce: due to limitation of resources, does not satisfy all individual and collective wants. Must decide which to satisfy first, decision has to be made.
* How much to produce: Allocate...
In Islam, fixing the price of commodities is not allowed as the increase of the price is caused by practice of supply and demand in the market. Hence in this case, benchmarking for the products is not allowed. It is can be reflected from of the Hadith of Prophet Muhammad S.A.W.
Narrated by Anas Ibn Malik,
“The people said: Apostle of Allah, prices has shot up, so fix prices for us. Thereupon the Apostle of Allah (PBUH) said: “Verily, Allah S.W.T. determines the climate of economic affluence and gloom. I do not want to take any action to fix the prices because I do not want, later in hereafter, any among you to demand for the return of your property and blood from me because of my tyranny (in fixing the prices).”
In the above hadith, the practice of fixing price is clearly condemned by Prophet Muhammad S.A.W. The Prophet S.A.W declared the act of fixing price as injustice towards the seller if the price is fluctuated due to the normal market forces.
But the second school of taught disagree with not fixing the price. They argued that the fluctuation in the price of commodities at the time of Prophet Muhammad S.A.W was due the normal market forces i.e. supply and demand of the commodity in the market. But nowadays the prices fluctuate more due to seller’s speculation rather than supply and demand of the product. In this case the price of the commodities should be fixed by the authorities. Hence benchmarking in this case is allowable by the...
...2.a Explain how economicsystems attempt to allocate and make effective use of resources.
We have 3 types of economy system: - Market economy
- Command economy
- Mixed economy
* Market economy: based on private companies, a lot of decisions based on market mechanism. In nature, market economy is decentralized, flexible, practice and can be change. Supply, demand and solvency influence on deciding ( còn thiếu)
* Command economy:
* Mixed economy: have factors of both.
To 1985, Vietnam is mixed economy system. The government controlled everything on market: what, how, whom to do? Finally the economy is slow and not develops because of lacking competition. Recognize need to change, Vietnam Communist Party decided to practice innovation from command to market economy. Government deployed what is called “market economy “. In fact it is mixed economy. Collective mechanism has weaknesses and need interfering of government to deny the breaking of economy. Role of government is promote economy sources to branches to deny lacking or superfluous in production. The economy sources is limited so government need to consider opportunity cost to use effetely.
* Land and resources: Vietnam has profuse resources but it is becoming exhausted because of controlling policy is not close and logical. However BaoViet is a service corporate so don’t need resources but it need...
...Economic Problems of the Philippines
Economic problems of the Philippines are very similar to those being battled by other underdeveloped and developing nations. After a long tryst with colonization, the nation is now grappling with increased imports and a mixed economy that is still to stabilize.
The Republic of the Philippines is located in Southeast Asia and Manila is its capital city. The country comprises 7,107 islands and ranks as the 12th most populous country in the world. Like most other southeast Asian regions, the Philippines too has a history of European colonization. It was a colony of Spain and the USA. The country is now home to multiple cultures and traditional ethnicity. It is also looked upon as a perfect example of a 'mixed economy'. Industrialization is a new development in the Philippines. Traditionally, the economy stabilized on the agrarian contributions and the manufacture of garments, pharmaceutical products and semiconductors. In the last decade, electronic exports added to the exports, including various products obtained by mining.
The economy of the nation also largely depends on the remittances from Filipinos residing overseas and investing in the homeland. However, exports are not evenly balanced by the imports that include heavy electronics, garments, various raw materials, intermediate goods and fuel. The influence of the Manila galleon on the nation's economy during the Spanish period, and bilateral trade...
Economicsystems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economicsystem is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. There are three types of economicsystems exist, they are command economy, market economy, and mixed economy. Command economy is also sometimes called planned economy. The expectations of this type of economy is that all major decisions that related to the construction or production, distribution, commodity and service prices are all made by the government. However, in market economy, national and state governments play a slight role. The assumption of the market plays a major role in deciding the right path for a country’s economic development. Mixed economy combines elements of both the command and market economies in one interrelated system. Certain features from both market and command economicsystems are taken to form this type of economy.
The market system is clearly the most effective economicsystem
A market economy may therefore also be known as a free market economy. It is a type of economicsystem in which...
...appropriate to local conditions. I agree. Though different countries suffer any losses, still, they recover after all, with their different types of economicsystem and following the principles of natural law.
Loss is an inevitable thing. Right technique or system must be used to solve it and gain achievements. In same manner, the government of South Africa experienced it too. During the inflation, South Africa turns down. But because the government has the strength and perseverance to rise again, it produces a progressive country in the present. In which, I recognize the way the administration governs the society. People in the administration of South Africa serve as economists who think deeper for the better of the country. In like manner, this country plays a big role in the continent of Africa. As what I have researched states that is the economic powerhouse of the continent. Using mixed market capitalistic economy system and with its high rate of Gross Domestic Product (GDP), it is obviously appreciable that South Africa contributes a lot which provides helping hands for those trembling tummies suffer from famine. Wherein, despite of stated problem given in the article yet South Africa’s economy is growing strongly.
In some other way, there is a country that from the start, its economic status really booms. By using the free market system or socialism plus good...
...the world, but also a complete code and system of life for any individual living in this world. While other religious preaching and practices provide general guidance only for the relationship between man and his Creator, Islamic teachings and methods guides man in his relations with ALLAH the Almighty and provide and guide them the norms which govern human beings temporary existence in this world.
Islam take into account an individual's political, socialeconomic, moral and all other consequential aspects.Every society has its own social & economicsystem. Islam being a complete code of life as well as comprehensive and distinct social system, possesses a corresponding social & economicsystem of its own. Islamiceconomicssystem is fast developing into a different and distinct part of economics . Large number of Islamic financial & banking institutions have been apparent in various Muslim as well as in some non-Muslim countries around the world.
Islamic financing is an exception that has taken many spectators and viewers by surprise. Islamic Finance and banking is mainly refers to financing or banking activity that is dependable and homogeneous with the principles of Islamic law (Sharia) and its practical implementation through...
PUBLIC PERCEPTION TOWARDS ISLAMIC HOME FINANCING (Bai Bithamin Ajil(BBA)): A STUDY IN MALACCA
NURUL FARHANA BINTI SADRI
NURUL RADHIAH BINTI SHAMSUDIN
BACHELOR OF BUSINESS ADMINISTRATION (HONS) FINANCE
FACULTY OF BUSINESS MANAGEMENT
UNIVERSITI TEKNOLOGI MARA
KAMPUS BANDARAYA MELAKA.
DECLARATION OF ORIGINAL WORK
BACHELOR OF BUSINESS ADMINISTRATION(HONS) FINANCE
FACULTY OF BUSINESS MANAGEMENT
UNIVERSITI TEKNOLOGI MARA
KAMPUS BANDARAYA MELAKA.
We, NURUL FARHANA BINTI SADRI, 2010290722 and NURUL RADHIAH BINTI SHAMSUDIN, 2010640076
Hereby, declare that,
• This work has not previously been accepted in substance for any degree, locally or oversea an is not being concurrently submitted for this degree or any other degrees
• This project paper is the result of our independent work an investigation, except where otherwise stated
• All verbatim has been distinguished by the quotation marks and sources of our information have been specifically acknowledged.
(NURUL FARHANA BINTI SADRI) (NURUL RADHIAH BINTI SHAMSUDIN)
LETTER OF SUBMISSION
The Head of Program
Bachelor of Business Administration (Hons) Finance
Faculty of Business Management